(Bloomberg) -- Telia Co AB plans to shed 3,000 positions, representing about 15% of its overall workforce, as the Swedish carrier deepens cost cutting efforts under the leadership of a new chief executive.
The cuts will impact all units as part of a program that targets annual savings of at least 2.6 billion kronor ($252 million), the company said in a statement on Wednesday. The program is expected to result in restructuring charges of 1.4 billion kronor this year, with no impact on the company’s outlook.
Mobile operators across Europe have been struggling to reduce costs amid high competition and regulatory hurdles that prevent consolidation. Companies including Vodafone Group Plc and Telefonica SA have made large job cuts over the last year.
Telia, which has operations spanning the Nordic region, Lithuania and Estonia, has been seeking to reduce its scale and cost base. Its results have been hampered by weaker earnings in its core market of Sweden and uncertainty over the future direction of its TV & Media unit. The company has been steadily cutting employees in recent years, announcing 1,500 jobs would be slashed last year and 1,000 jobs in 2021.
Earlier this year, the company exited Denmark in a drive to focus on markets where it is more competitive. Net sales totaled 22.4 billion kronor in the second quarter, slightly ahead of analyst expectations.
“This is a tough decision, but one that is necessary to ensure the long-term success of Telia,” said Chief Executive Officer Patrik Hofbauer, who took on the role in February.
Telia’s shares fell 0.5% to 32.46 kronor at 9:45 a.m. in Stockholm. Shares are up 26% so far this year.
The carrier is also cutting its vendor financing program by about 50%, as well as reshaping its structure by putting more onus on its country units, it said. Reducing the scope of the program will help stabilize the company’s cash flow, Telia said.
What Bloomberg Intelligence Says:
The new cost-saving plan shows Telia’s rejuvenated ambitions under new CEO Patrik Hofbauer — with wide-ranging job cuts amounting to about 15% of staff — though doubts over execution are likely following prior management’s transformation struggles. The aim to halve the size of its vendor-financing program also appears sensible, to improve working capital and cash-flow visibility. Expected annual cost savings of 2.6 billion kronor equate to about 8% of 2024 consensus Ebitda.
— BI analyst Tom Ward
Hofbauer joined after Telia’s former CEO, Allison Kirkby, was announced as the new head of BT Group Plc last year. She was also focused on cutting costs before she left the company.
“This is definitely one of the larger cost savings exercises we have seen in the industry, but likely also a natural step given the recent CEO change,” Mads Lindegaard Rosendal, an analyst at Danske Bank, said in a note to clients.
--With assistance from Christopher Jungstedt, Anton Wilen, Henry Ren and Jillian Deutsch.
(Updates with further details, share price.)
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